Beto O'Rourke's political career drew on donations from the pro-GOP business establishment

EL PASO — Before Beto O’Rourke became the darling of liberal online donors, his top financial backers hailed from a different set entirely — wealthy businessmen who have sought political influence by collectively donating millions of dollars to Republicans.

Several of El Paso’s richest business moguls donated to and raised money for O’Rourke’s City Council campaigns, drawn to his support for a plan to redevelop El Paso’s poorer neighborhoods. Some later backed a super PAC that would play a key role in helping him defeat an incumbent Democratic congressman.

For his part, O’Rourke worked on issues that had the potential to make money for some of his benefactors. His support as a council member for the redevelopment plan, which sparked controversy at the time because it involved relocating low-income residents, many of them Hispanic, coincided with property investments by some of his benefactors.

As a congressman, he supported a $2 billion military funding increase that benefited a company controlled by another major donor. That donor, real estate developer Woody Hunt, was friends with O’Rourke’s late father. Hunt also co-founded and funds an El Paso nonprofit organization that has employed O’Rourke’s wife since 2016.

“We shared a common goal,” said Ted Houghton, a local financial adviser and longtime O’Rourke donor who raised money for former Texas governor Rick Perry, a Republican, and helped steer millions in state transportation funding to the city. “The common goal was we needed to move El Paso in a different direction.”

O’Rourke, who emerged in 2018 as a national Democratic sensation in his narrow loss to Sen. Ted Cruz, R-TX, launched his campaign for president Thursday promising a new era of unity as he campaigned through small towns in eastern Iowa. The Iowa caucuses in early February will kick off the 2020 primary season.

In contrast to the aspirational image he has fostered in recent years, however, O’Rourke’s political career traced a more traditional path for a Texas politician — winning support from a typically pro-GOP business establishment interested in swaying public policy. Born into one politically potent family and married into another, he benefited repeatedly from his relationships with El Paso’s most powerful residents, including several nationally known Republican moneymen.

The former congressman’s GOP ties are likely to become an issue as he enters a crowded Democratic presidential primary field that has so far leaned leftward. Supporters of Sen. Bernie Sanders have already criticized O’Rourke’s voting record as insufficiently liberal.

Republicans are also piling on. A recent ad by the Club for Growth, a conservative group with a focus on cutting taxes, described O’Rourke’s pushing a redevelopment scheme “to bulldoze a poor Hispanic neighborhood.”

“O’Rourke, because of his charisma, can kind of pull off some of this behind-the-scenes power peddling,” said El Paso historian and activist David Romo, who has long opposed the business community’s push to redevelop downtown. “He was the pretty face in the really ugly gentrification plan that negatively affected the most vulnerable people in El Paso.”

O’Rourke and his allies did not see it that way. At the start of his career, O’Rourke went door-to-door to sell the plan, crafted by the Paso Del Norte Group, a dues-paying alliance of business and community leaders on both sides of the U.S.-Mexico border.

O’Rourke, his mother, his wife and his father-in-law, William Sanders — one of the most prominent real estate investors in the country — had all been members of the group, which included many of the financial backers of O’Rourke’s early campaigns. Sanders led a private investment group that was buying up downtown properties, as some other donors to O’Rourke’s campaigns were doing.

The plan initially called for seizing land in one of the city’s poorest neighborhoods through eminent domain — the same tactic that O’Rourke has opposed as part of the Trump administration’s plan to build a wall on the U.S. border with Mexico. Faced with accusations of a potential conflict of interest, O’Rourke eventually agreed to recuse himself from City Council votes on the plan, which was later shelved as real estate struggled during the 2008 recession.

The local business leaders who have supported O’Rourke’s career say they were brought together by a common vision for improving the city.

It is a mission that until recently was the north star of O’Rourke’s political career.

“There was this point where it really came into focus how exceptional this community is, the people, the border, the connection to the rest of the world,” O’Rourke told The Washington Post. “I’ve worked hard to try to make sure that every El Pasoan could benefit from living in a thriving binational community.”

The son of a local Democratic-turned-Republican politician and a furniture store owner, O’Rourke has described his childhood as beset by disillusionment with his hometown.

El Paso had once been a prosperous city with a thriving middle class, buoyed when a civil war drove a wave of wealthy Mexicans north into Texas in the 1920s. But when O’Rourke was young, the city found itself in decline, with many downtown buildings vacant or blighted and an economy focused on low-wage labor.

When O’Rourke moved home several years after college in 1998 and started an internet services and software company, two local Democratic politicians who would become his political mentors were beginning to put the pieces in place for the city’s rebirth. Future Mayor Ray Caballero and then-state Sen. Eliot Shapleigh crafted a plan in the late 1990s to attract educated professionals, particularly in the areas of medical research and education.

The state’s political power structure at the time was dominated by Republicans, so the Democrats began to recruit local business leaders to the cause.

They included Hunt and oil refining billionaire Paul Foster, who would become fundraisers and donors for Texas Gov. George W. Bush and his successor, Perry. Both continue to be major donors to Republicans. In the 2018 election cycle, Hunt gave more than $1 million to Republican efforts to keep control of the U.S. House and Senate. Foster gave more than $2.5 million. Sanders, who joined the effort later, has previously given money to Cruz and the National Republican Senatorial Committee.

“It was really important to get these high-roller political types involved,” Caballero said of the early efforts to influence the state Capitol.

Hunt, Foster, Houghton and others were rewarded by Bush or Perry with appointments to state boards, from which position they would eventually help win huge new investments for El Paso, including a new four-year medical school, a nursing school, roads to channel cross-border trade around the city and a downtown light-rail system.

“We don’t think there is a pay-to-play issue,” said Houghton, who now describes himself as a political independent. “But you have got to be a part of the team, show you are part of the team.”

Although Republican donors from El Paso were working to get a foothold in Austin, Caballero and Shapleigh began urging a group of young liberals to run for El Paso City Council. O’Rourke was a star of the group.

“Bottom line, he wants to get things done. That’s his history,” Shapleigh said. “He can walk across the aisle and get people to support him.”

The same network of donors wooing influence in Austin came to the aid of O’Rourke and his friends, including Steve Ortega and Susie Byrd, two other young liberals who also ran for and won seats on the City Council in 2005.

“None of us are Republicans. None of us vote Republican. None of us had ever given money to Republicans before. But we like what these guys are doing,” Ortega said of the city’s GOP business leaders back in 2005. “We all got contributions from those guys. I’m proud of that.”

The downtown redevelopment plan that O’Rourke backed early in his tenure on the City Council had been drafted under the leadership of his father-in-law, Sanders, who had also positioned himself to profit from a turnaround by forming an investment group with other O’Rourke donors.

When O’Rourke ran for re-election to the City Council in 2007, members of Sanders’ investment group helped him raise more than $54,000, nearly nine times as much as his competitor in the race, Trini Acevedo.

The redevelopment effort hit a snag early in O’Rourke’s tenure when a city-backed public relations plan presented at a 2006 City Council meeting used racially insensitive imagery and language.

The slide presentation portrayed El Paso with a picture of an older Hispanic man in a cowboy hat, next to a caption that described the city’s image as “gritty,” “dirty,” “lazy” and with people who “speak Spanish.” The city’s future appeared on another slide, with photos of the Texas-born actor Matthew McConaughey and the Spanish actress Penélope Cruz, who were described as “educated,” “entrepreneurial” and “bi-lingual.”

O’Rourke’s spokesman, Chris Evans, said O’Rourke condemned the marketing pitch at the time. “Beto did not approve of that kind of language to describe those in his community or anyone,” Evans said.

By 2012, O’Rourke had set his sights on the city’s eight-term Democratic congressman, Silvestre Reyes, a decorated Vietnam veteran and Border Patrol officer who had fallen out of favor with the new liberals and older business executives working to remake El Paso.

The national party closed ranks to protect Reyes, who secured endorsements from former President Bill Clinton and then-President Barack Obama. Many El Paso donors who had backed O’Rourke’s council races rallied to his side, along with a new national network of Republican donors who were spending money to defeat both Democratic and Republican incumbents in primaries.

The group, the Campaign for Primary Accountability, received $37,500 in donations from a firm controlled by Sanders and $46,500 from other El Paso business executives.

As an independent operation, the group spent $240,000 to defeat Reyes in the primary election, a significant sum compared to the $616,205 spent by O’Rourke’s campaign in that election cycle. Buoyed by support from Republican-leaning areas of the city, O’Rourke won 50.5 percent of the primary vote, narrowly avoiding a runoff.

Chuy Reyes, who ran his brother’s losing campaign that year, blamed O’Rourke’s victory on the spending by local business leaders.

“I guess they got to the point where Silvestre would not carry their bucket of water on what they wanted to do because he just didn’t believe in it,” Chuy Reyes said. “It was all driven because they wanted, No. 1, to grow their special interests.”

A spokesman for O’Rourke said Reyes was the candidate whom voters identified with entrenched power. “Beto defeated a 16-year incumbent and received more than 50 percent of the vote in a five-person race because the people of El Paso wanted a representative who would put the interests of the community above special interests,” Evans said.

Once O’Rourke got to Congress, he made cleaning up corruption in government a priority. He stopped taking money from political action committees after his first term, promised to support term limits for members of Congress, and sponsored bills to provide partial public financing for campaigns and limit donations to national party committees.

At the same time, O’Rourke continued to receive large amounts of money from employees of companies run by major donors. Employees of one of his father-in-law’s former companies, Strategic Growth Bank, including Sanders himself, gave $57,400 during O’Rourke’s 2014 and 2016 House campaigns. Employees of El Paso-based Western Refining, including its chairman, Foster, gave $10,600 in 2014.

Hunt Companies employees, including Hunt, gave $60,300 to O’Rourke in the 2014 and 2016 cycles, more than the employees of any other business, according to the Center for Responsive Politics.

O’Rourke worked in Congress to promote a military funding issue that directly affected Hunt’s business. Hunt Companies boasts of being the nation’s largest builder and manager of privatized military housing in the country. In 2015, the Obama administration persuaded Congress to cut troop stipends for those units.

Until then, troops who lived in the privatized units on bases would receive a monthly stipend equal to their projected rent. But when the cuts became law in 2014, the stipend was to be gradually reduced. As a result, providers of base housing were faced with either reducing their rents and losing revenue or risking the loss of tenants by asking soldiers to pay out of pocket.

In response, Hunt Companies lobbyists billed $380,000 in 2017 and 2018 for work that included contact with Congress on military housing and defense appropriations issues. During this period, O’Rourke’s office listed restoring the money for privatized housing as the 13th of 15 priorities in an internal database shared with Republican leaders, according to a person familiar with the work of O’Rourke’s congressional office.

With the support of Republican leaders of the House Armed Services Committee, who had opposed the initial housing stipend cuts, the defense spending bill that passed in 2018 included an increase in funding for privatized housing that the Congressional Budget Office estimated would cost taxpayers an additional $2 billion between 2019 and 2023. O’Rourke voted for the bill, which President Trump signed.

O’Rourke’s spokesman said Hunt played no role in O’Rourke’s support for the measure.

“These cuts would directly and adversely impact access to housing for service members and their families at El Paso’s Fort Bliss and other large military bases across Texas,” Evans said.

In an interview, Hunt said he did not pressure O’Rourke on issues that affected the businessman’s enterprises.

“I did not contact or otherwise leverage my personal relationship with Rep. O’Rourke on any change in the base housing allowances for privatized housing or on any other legislative issues that might have affected Hunt Companies,” he said. Hunt donated to both O’Rourke and Cruz during the 2018 U.S. Senate campaign but did not publicly endorse either in the general election.

The benefits to the O’Rourke household from Hunt’s largesse were not limited to political donations. Hunt co-founded and has funded the Council on Regional Economic Expansion and Educational Development, a philanthropic effort to improve the academic performance of El Paso-area students.

O’Rourke’s wife, Amy, a former elementary school teacher and charter school founder, reported earning $146,085 between 2016 and 2018 as a consultant for the group.

“She uses her background in education to direct the local nonprofit’s Choose to Excel program, aimed at increasing graduation rates in the community, closing the achievement gap for El Paso students, and helping strengthen college and career readiness,” Evans said.

O’Rourke’s work as a congressman has put him in contact with Hunt in other ways as well. In 2015, O’Rourke’s office organized a two-day conference on expanding cross-border trade. The first panel discussion featured Hunt and Foster’s wife, Alejandra de la Vega, who owns retail stores on both sides of the border. Foster spoke at an event later in the schedule.

Before they took the stage, O’Rourke rose to make opening remarks. He thanked Woody Hunt “for making this possible.”

Disclosure: The Woody and Gayle Hunt Family Foundation, Paul L. Foster, and Western Refining have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.